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BookingAlpha Option Trading Advisory

Saturday, July 4, 2015

Weekend Portfolio Analysis (July 4, 2015)

Hello comrades from all over the world!
Today I'm writing to you from sunny and awesome Orlando, Florida!

We arrived late last night and focused on an intense, passionate game of Monopoly that brought out the worst of us amongst angst, desperation and arrogance. At one point I had so much money I ended up paying another player $5 to have him roll the dice for me (like he was my servant), as I was tired of rolling the dice myself and needed to improve my quality of life.

But this is not Henrik's traveling adventures! This is not about Henrik, the mundane Cuban Monopoly gambler. This site is about trading and the legit joy of seeing your capital consistently grow without the slavery of a 9 to 5 cubicle. So, let's get down to it shall we?!

Market Conditions
(Click on image to enlarge)
Stochastics: 22 (neutral)
McClellan: -42 (neutral)
Number of Stocks above their 20 Day Moving Average: 31% (neutral)

Neutral territory here but close to a short term extreme, which can be reached with a 1.5% drop from here. That'd be SPX around 2045. With the sell off seen on Monday my system almost reached an oversold condition but it didn't get quite there in all 3 indicators. With that elephant red bar, closing near the low of the day I was expecting some more downside the next day and it didn't happen. For this reason I didn't get to sell Out of the Money Puts. But strict technicality aside, for the more Bohemian trader, it was possible to sell something like the August SPX 1840/1830 Put spread for 0.60 credit or better which looked like a decently safe play. It was also possible to sell RUT 1160/1150 with July options expiring in just two weeks for 0.60 credit as well offering good odds down there.

The Russell index looks a little bit weaker by comparison but the lower end of the uptrend channel was very well defended on Friday.

It is always psychologically hard to sell Puts during market sell offs because it will always seem like the end of the world. All you will hear around you is negativity, from the media, your friends, girlfriend and your dog. But it is the best time for Put selling. You can always test the waters with a smaller position first if you have a large portfolio.

I didn't pull the trigger waiting for more extreme pessimism with my indicators telling me there was still a bit more downside room. I don't regret what may seem like a missed opportunity now, because the fact that the market did not keep falling was good for my existing Iron Condors. You can always find some sort of joy with anything the market throws at you, provided you have been playing conservatively.

July positions
SPX 1935/1940/2220/2225 unbalanced Iron Condor
95% probability of success and 2 weeks to expiration. Looks like I won't have problems here.

August positions
RUT 1150/1160/1350/1360 unbalanced Iron Condor
70% probability of success with 7 weeks to expiration. No concerns on the Call side. I need to be careful about the Put side in the next few days should the market keep falling.

Action Plan for the week
I won't touch the July SPX Iron Condor

I will adjust the Put side of the RUT August Iron Condor in the event that RUT falls from its current price of 1248 to around 1225. If that happens, I will close the 1150/1160 Put spread for a loss and I will deploy a new Put spread in the 1080/1070 area.

If SPX falls to around 2040 - 2045, I will be a happy seller of the August 1825/1820 Credit Put spread for 0.30 credit or better.

If the market moves sideways or goes up, my time will be employed in writing up useless market quotes on Twitter.

Economic Calendar
Sunday: Greek referendum on bailout terms. (Expect the Euro to move violently)
Monday: US ISM Non-manufacturing PMI
Tuesday: US Trade Balance.
Wednesday: FOMC Minutes. China's CPI

Happy belated 1st of July to all my Canadian friends!
Happy 4th of July to my American readers!

Party hard and irresponsibly!
Trade sanely and responsibly!

If you are interested in a responsible and sustainable way of trading options for consistent profits, consider acquiring LTOptions, my options trading system revealed to the last detail.

Check out 2015 Track record

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  1. I've layered an Aug 1320-1330 Call spread onto the position...


  2. Last Monday, my indicator told me that we had an oversold signal on SPX when it went below 2065. I was able to sell SPX Sept 30th 1800/1790 for .80 credit.

    The account ended the first half of the year up 13.61%. My goal is to reach 20% or better by the end of the year.

    Here are the current positions:

    IWM August 21st 105/103 cps – currently profitable; will close for a debit of .02 in early July

    SPX August 31st 1750/1725 cps– currently profitable; will close for a debit of .25 in early July

    RUT September 30th 1000/990 & 1380/1390 iron condor - currently profitable

    SPX September 30th 1725/1700 & 2275/2300 iron condor - currently profitable

    SPX September 30th 1800/1790 cps - currently profitable

    SPX October 30th 1725/1700 & 2275/2300 iron condor - currently profitable

  3. Last week:
    I did not make any trade last week. I did not open new positions and there was no need to adjust my existing spreads. I just enjoyed the theta decay of my credit spread portfolio.

    Open positions:
    5x SPX Aug 1830/1850 cps + 4x SPX Aug 2200/2220 ccs + 1x SPX Aug 2180/2200 dcs
    5x RUT Aug 1140/1160/1360/1380 ics

    Next week:
    I will monitor open positions. The adjustment points for the SPX Aug spreads are roughly (2025;2140) and for the RUT Aug spreads (1235;1300).

    Good trading,

    1. Hi Martin,

      I noticed that RUT triggered your adjustment point today when it went below 1235. Do you wait until the end of the day to make the adjustment or do it right away when it is breached? RUT is now trading above 1235.

  4. Why are you posting a pic of Lake Eola in Orlando when you live in South Florida? :P